Gov. Nathan Deal’s plan to help financially ailing rural hospitals, announced last month, has drawn strong praise from legislators and health industry leaders.

Clyde Reese

Deal proposed a change in licensing rules to permit a struggling rural hospital, or one that recently closed, to offer downsized services that would include an emergency department.

But a drawback has emerged – one that, if unchanged, may lower the chances of these freestanding ERs being built.

Such facilities, as proposed, would not be able to bill Medicare or Medicaid at the current hospital rates, but would have to bill those programs at a lower “provider’’ rate.

Clyde Reese, commissioner of the Department of Community Health, told GHN on Tuesday that it may take legislation, or regulatory approval from federal health officials, to create a format so these freestanding rural facilities would draw higher reimbursements than is now possible.

Reese said possible revisions would be discussed by the newly created rural hospital stabilization committee.

Deal made his announcement about rural Georgia hospitals in response to the closures of four of them in the past two years.

The kind of downsized hospital facility he envisions could provide childbirth services and some kinds of elective surgery as well as the usual emergency room services, he said.

Community Health held a public comment hearing Tuesday on the proposal for freestanding emergency departments.

Jimmy Lewis of Hometown Health, an organization of rural hospitals, said it’s “an excellent first step’’ but also noted that reimbursement for these facilities needs to be addressed.

A former Georgia Medicaid director, Mark Trail of Health Management Associates, told GHN that a regular hospital’s outpatient and inpatient rates — paid as a percentage of its costs — are significantly higher than a provider rate for services, which is a fixed price.

A spokeswoman for Gov. Deal, Sasha Dlugolenski, said Tuesday, “It is true that these rural freestanding emergency departments won’t be able to receive a facility fee because they would no longer be classified as hospitals; however, they can still bill fee-for-service as a provider for any allowable services they choose to provide, such as basic OB/GYN services.”

“We will continue to monitor the situation alongside the Department of Community Health, but…feel confident that the licensure modification will help rural hospitals that are in danger of shutting down entirely stay operational and continue providing the most essential services to their communities.”

Stewart Webster Hospital in Richland closed last year.

Many rural hospitals have large numbers of uninsured patients, and have to absorb the costs of treating them. That’s one of the reasons why such facilities are struggling.

Experts say these hospitals would be helped financially under an expansion of Medicaid, because many of those uninsured people would then have coverage. But the governor, backed by the Republican leadership in the Legislature, has said “no” to expansion, citing the costs to the state.

Beth Stephens, health access program director for the consumer group Georgia Watch, said Tuesday that freestanding ERs could help increase health care options for a community that has lost a hospital.

But she added that “this is not a lifeline for rural hospitals and it’s not an alternative to Medicaid expansion.”

The idea does not eliminate the problem of providing unreimbursed care to patients without insurance, Stephens said. Expanding Medicaid would be a better solution, she said.

Rural health care emerged as a major issue at the outset of the General Assembly session, with state Rep. Sharon Cooper (R-Marietta), who chairs the House Health and Human Services Committee, telling WABE that “there are some of those rural hospitals that need to close.”

Two days later, Cooper backtracked on that comment, saying that closing rural hospitals is an “unthinkable proposition,’’ according to the AJC. Cooper said closing hospitals “would have serious consequences on the affected community, hurting it economically and limiting access to acute care for Georgians.”

Sen. David Lucas (D-Macon) introduced legislation that would help rural areas such as Hancock County — where the hospital closed several years ago — to build “stabilization centers.’’ Such a center would have the mission of stabilizing the condition of a patient whose life may be at risk.

But Lucas’ bill failed to gain traction. Some said it would run into problems with the state’s health facility regulatory apparatus, called certificate of need, or CON. These CON laws govern such issues as the construction and expansion of medical facilities in Georgia.

Separately, the rural Georgia hospital that closed in February, Lower Oconee Community Hospital in Glenwood, has reopened under a new owner. But its future is uncertain. Reese said Tuesday that Lower Oconee’s Medicare and Medicaid provider numbers have been terminated, meaning that currently it can’t bill those programs for services to their beneficiaries.